Opinion
Civil Action No. 3:03-CV-1835-R
January 29, 2003
ORDER
Pursuant to the District Court's Order Referring Case for Report and Recommendation, filed September 29, 2003, all filings in this case have been referred to the undersigned U.S. Magistrate Judge for hearing, if necessary, and for recommendation or determination. Pending before the Court are:
(1) Defendants Stephen Niermann and Niermann and Olivo, P.A.'s motion to dismiss, encompassed in the Original Answer of Stephen Niermann and Niermann and Olivo, P.A., filed August 8, 2003;
(2) Plaintiffs' Response to Defendants' Motion to Dismiss, filed September 16, 2000;
(3) Defendant Niermann's Brief in Support of Motin to Dismiss ("Br.", filed October 27, 2003;
(4) Plaintiffs' Response to Defendants' (Stephen Niermann and Niermann and Olivo, P.A.) Motion to Dismiss ("Resp.), filed November 14, 2003;
(5) Defendants, Stephen Niermann and Niermann and Olivo's Reply to Plaintiffs' Response to Defendants' Motion to Dismiss ("Reply"), filed November 25, 2003;
(6) Plaintiffs' Response to Niermanns' Reply to Plaintiffs' Response to Defendant Niermanns' Motion to Dismiss, filed December 10, 2003;
(7) Plaintiffs' Motion to Add Defendants, filed January 7, 2004; and
(8) Defendants' Joint Response to Plaintiffs' Motion to Add Defendants, filed January 27, 2003.
After thoroughly reviewing the pleadings and the applicable law, the Court is of the opinion that the motion to dismiss should be GRANTED and Plaintiffs' suit should be DISMISSED with prejudice, that the motion to add defendants should be DENIED, and that all motions still pending should be DENIED, as moot.
I. BACKGROUND
A. Factual History
On May 1, 1992, Brian P. Sanford, P.C. ("Sanford") obtained a judgment against Burma Jean Martin ("B.J. Martin") in the 68th Judicial District Court of Dallas County, Texas. (Plaintiffs' First Amended Complaint ("Compl.") at 13; Resp., Exh. 17.) From August 4, 1992, through February 1, 1994, Sanford executed the judgment against B.J. Martin upon seven properties whose title had been transferred from B.J. Martin to her parents, Hazel Victoria Martin ("Mrs. Martin") and John Paul Martin ("Mr. Martin"). (Compl. at 23-25.) Sometime thereafter, Sanford sued Mr. and Mrs. Martin in the Dallas County Court at Law No. 3, alleging that letters sent to the properties' tenants amounted to libel. Id. at 25.
Plaintiffs filed suit against Defendants in the 298th District Court of Dallas County, Texas on September 27, 1996. (Br., Appx., Exh. C.) In their petition, Plaintiffs alleged that Defendants had actual knowledge of Mr. and Mrs. Martin's ownership of the subject properties, fraudulently represented to the court that Plaintiffs had been served with various documents and pleadings, and intentionally inflicted mental anguish upon Defendants. Id. at 7, 13-21. On July 1, 1998, B.J. Martin sought a bill of review concerning the judgment obtained in the 68th Judicial District Court of Dallas County, Texas. (Br., Appx., Exh. D.) Therein, B.J. Martin complained of Sanford's fraud in obtaining the judgment against her, particularly in claiming to have served her with documents which were not in fact served and in executing on properties which Defendants knew to be owned by Mr. and Mrs. Martin. Id. at 4-10. Sometime in 2001, Plaintiffs filed suit against Defendants in the Eastern District of Arkansas. (Br., Appx. Exh. E.) That lawsuit was dismissed on May 7, 2001, due to lack of subject matter jurisdiction. Id. Plaintiff next filed suit against Defendants in Arkansas state court and that lawsuit was also dismissed for lack of jurisdiction. (Resp. at 13.)
B. Procedural History
On June 6, 2003, B.J. Martin, Mrs. Martin, and Mr. Martin, proceeding pro se, filed this suit in the Eastern District of Arkansas. Plaintiffs' First Amended Complaint ("Compl."), filed July 31, 2003, alleges causes of action against Brian P. Sanford and Brian Sanford, P.A. ("Sanford") and Stephen Niermann and Niermann Olivo, P.A. ("Niermann") for fraud on the court, conspiracy to commit fraud, fraud, deprivation of civil rights, unjust enrichment, and intentional infliction of mental anguish and outrage. (Compl. at 28-34.) Plaintiffs' claims arise out of the judgment obtained by Sanford against B.J. Martin in state court, the execution of that judgment on certain properties whose title had allegedly been transferred to Mr. and Mrs. Martin, and Defendants' subsequent actions in the several courts which have considered these issues. (Compl. at 13-28.)
On July 10, 2003, Sanford filed a motion to dismiss the complaint. Niermann filed an answer on August, 8, 2003. That answer also contained the motion to dismiss which is currently before the Court. On August 11, 2003, the District Court in the Eastern District of Arkansas concluded that venue was improper in Arkansas, ordered the case transferred to the Northern District of Texas, and otherwise denied Sanford's motion to dismiss. Because Niermann's motion to dismiss was encompassed in the answer and was not briefed or filed in accordance with this Court's local rules, on October 10, 2003, the Court ordered the parties to file briefs to assist the Court in determining the motion. The motion to dismiss is now fully briefed and ripe for determination. Niermann moves to dismiss Plaintiffs' Complaint on multiple grounds, including res judicata based on prior court judgments, statute of limitations, FED. R. CIV. P. 41, and release and settlement. The Court only addresses the affirmative defenses of res judicata and statute of limitations.
All other issues raised in Sanford's motion to dismiss were not considered by the court due to Sanford's failure to file a brief as required by local rules and failure to cite to any legal authority.
Although Niermann did submit a brief in response to this Court's order, the brief failed to address Plaintiffs' specific claims, set out the elements of his defenses, or apply the facts supporting Plaintiffs' claims to those elements.
II. MOTION TO DISMISS
A. Legal Standard for Dismissal under Federal Rule of Civil Procedure 12(b)(6)
Pursuant to Rule 12(b)(6), a claim for relief may be dismissed for failure to state a claim upon which relief can be granted. Motions to dismiss under Rule 12(b)(6) are disfavored and rarely granted. Sosa v. Coleman, 646 F.2d 991, 993 (5th Cir. 1981). Under this standard, a court cannot look beyond the face of the pleadings. Baker, 75 F.3d at 196; Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir. 1999), cert. denied, 530 U.S. 1229 (2000). To avoid dismissal, those pleadings must show specific, well-pleaded facts, not mere conclusory allegations. Guidry v. Bank of LaPlace, 954 F.2d 278, 281 (5th Cir. 1992). The court must accept those well-pleaded facts as true and view them in the light most favorable to the plaintiff. Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996). A court cannot dismiss a complaint, or any part of it, for failure to state a claim upon which relief can be granted unless it appears beyond a doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-6 (1957); Blackburn v. City of Marshall, 42 F.3d 925, 931 (5th Cir. 1995). "The issue is not whether a plaintiff will ultimately prevail, but whether the claimant is entitled to offer evidence to support the claims." Scheuer v. Rhodes, 416 U.S. 232, 236 (1974).
Furthermore, where a plaintiff proceeds pro se, the court is further guided by the general rule that allegations in a pro se complaint are construed more permissively. See Bannister v. Dal-Tile Intern., Inc., 2003 WL 21145739, at *1 (N.D. Tex. May 14, 2003). While pro se pleadings are construed liberally, a pro se plaintiff still bears the burden "to plead specific facts and proper jurisdiction, pursuant to Rule 8 of the Federal Rules of Civil Procedure." Martin v. United States Post Office, 752 F. Supp. 213, 218 (N.D. Tex. 1990).
Although Rule 12(b)(6) dismissal is ordinarily determined by whether the facts alleged in the complaint give rise to a cause of action, when a successful affirmative defense appears on the face of the pleadings, dismissal under Rule 12(b)(6) may be appropriate. Kansa Reinsurance Co. v. Congressional Mtg. Corp. of Tex., 20 F.3d 1362, 1366 (5th Cir. 1994). "[A] complaint that shows relief to be barred by an affirmative defense . . . may be dismissed for failure to state a cause of action." Kaiser Aluminum Chemical Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982) (citations omitted). On its own motion, a court may dismiss a complaint for failure to state a claim. Shawnee Int'l v. Hondo Drilling Co., 742 F.2d 234, 236 (5th Cir. 1984).
B. Res Judicata
Dismissal of a claim is appropriate when the claim has previously been litigated. Mowbray v. Cameron County, 274 F.3d 269, 282 (5th Cir. 2001). The doctrine of res judicata, or claim preclusion, is an affirmative defense and bars litigation of any issue connected with a cause of action or defense that, in the use of diligence, a party might have tried or actually did try. Ellis v. Amex Life Ins. Co., 211 F.3d 935, 938 n. 1 (5th Cir. 2000). It has four elements: "(1) the parties must be the same in both cases; (2) the prior judgment must have been rendered by a court of competent jurisdiction; (3) there must be a final judgment on the merits; and (4) the same cause of action must be involved in both cases." Id. at 937. Res judicata "`bars all claims that were or could have been advanced in support of the cause of action on the occasion of its former adjudication, . . . not merely those that were adjudicated.'" In re: Howe, 913 F.2d 1138, 1144 (5th Cir. 1990) (quoting Nilsen v. City of Moss Point, 701 F.2d 556, 560 (5th Cir. 1983)).
1. Fraud
Plaintiffs' allegations of fraud include claims that Defendants represented they would not foreclose on the subject real property if provided copies of John Paul and Hazel Victoria Martin's warranty deeds, and then did foreclose on the property, and that Defendants fraudulently executed on the subject real property. (Compl. at 31.) Plaintiffs allege they first discovered Defendants' fraud while this action was pending in the Northern District of Texas and in the Arkansas Bankruptcy Court, but that those courts did not consider the fraud claim. (P.'s Resp. at 2.) However, in the suit before the Northern District of Texas, Mr. and Mrs. Martin's counterclaim complained of Sanford's actions in foreclosing on the subject property and sought a declaration that the foreclosure sale was void. ( Sanford v. Martin, Civil Action no. 3:93-CV-0145-H; Def.'s Orig. Ans. Counterclaim at 6-7, filed January 28, 1993.) The District Court expressly found that Sanford had no notice of any deeds showing ownership of the subject property in Mr. and Mrs. Martin, and that the sheriffs foreclosure sale of the subject property was valid. ( Sanford v. Martin, Civil Action no. 3:93-CV-0145-H; Final Judgment, filed July 16, 1998.)
While not necessary to the Court's analysis, it is notable that although Plaintiffs assert that they were unaware of Defendants' alleged fraud until around 1993, they clearly must have been aware of the alleged fraud (promising not to foreclose and then foreclosing) at the time it was committed. Therefore, even if these claims had not been previously adjudicated, they would be barred by the statute of limitations.
In determining whether the same cause of action was involved in the instant case and the earlier lawsuit, "[t]he critical issue is not the relief requested or the theory asserted. The question is instead whether [the] plaintiff bases the two actions on the same nucleus of operative facts." Smith v. Schrock, 2002 WL 432980, at *6 (N.D. Tex. Mar 15, 2002) (citing In re Howe, 913 F.2d 1138, 1144 (5th Cir. 1990)). In both cases, Plaintiffs' claims are based on their assertion that Defendants fraudulently foreclosed on the subject property, knowing that title had been transferred to Mr. and Mrs. Martin. Although Niermann was not a party to the prior lawsuit, he was Sanford's attorney and because Plaintiffs complain of Niermann's actions taken on behalf of Sanford in that capacity, Niermann and Sanford have a sufficiently close relationship for there to be privity between the two. C.f. Russell v. SunAmerica Securities, Inc., 962 F.2d 1169, 1173 (5th Cir. 1992) (noting that "[a] non-party defendant can assert res judicata so long as it is in `privity' with the named defendant"); see also Southwest Airlines Co. v. Texas Int'l Airlines, Inc., 546 F.2d 84, 95 (5th Cir. 1977) (noting that privity is nothing more than a "legal conclusion that the relationship between the one who is a party on the record and the non-party is sufficiently close to afford application of the principle of preclusion") (citation omitted); accord Gray v. Lacke, 885 F.2d 399, 495 (7th Cir. 1989) ("[I]n official-capacity suits, privity exists between government entities and their employees.") (citations omitted). In the earlier lawsuit, a final judgment on the merits was rendered by a court of competent jurisdiction. ( Sanford v. Martin, Civil Action no. 3:93-CV-0145-H; Final Judgment, filed July 16, 1998.) Because Plaintiffs' claims against Defendants for fraud concerning the foreclosure sale of the subject real property have been fully litigated, these claims are barred by res judicata and should be dismissed with prejudice.
2. Unjust Enrichment
Plaintiffs assert a cause of action for unjust enrichment, stating that Defendants were enriched at the expense of Plaintiffs and that "Defendants should return Plaintiffs' real property parcels and rents to Plaintiffs John Paul and Hazel Victoria Martin." (Cornpl. at 32.)
As noted in above, in Sanford v. Martin, Civil Action no. 3:93-CV-0145-H, the District Court expressly found that the recording of Defendant Sanford's abstract of judgment and the sheriff's foreclosure sale of the subject property was valid. ( Sanford v. Martin, Civil Action no. 3:93-CV-0145-H; Final Judgment, July 16, 1998.) Because the basis of Plaintiffs' claim of unjust enrichment is the same nucleus of operative facts upon which Plaintiffs based their counterclaims in the earlier case, and because the issue of whether Defendants fraudulently obtained title to the subject properties has been fully litigated, Plaintiffs' claim of unjust enrichment is barred by res judicata and should be dismissed with prejudice.
3. Remaining claims
Plaintiffs' remaining causes of action include claims of fraud on the court, conspiracy to commit fraud on the court, fraud, deprivation of civil rights under 42 U.S.C. § 1983, and intentional infliction of mental anguish and outrage. These claims also arise out of the judgment obtained by Sanford against Martin in state court, the execution of that judgment on certain properties whose title had allegedly been transferred to Mr. and Mrs. Martin, and Defendants' subsequent actions in the several courts which have considered these issues. (Compl. at 13-28.) Plaintiffs state they first discovered they had a cause of action against Defendants on December 2, 1996. (Resp. at 13.) At that time, the above-mentioned lawsuit was pending before the Northern District of Texas, and Plaintiffs had asserted counterclaims against Defendants. Because Plaintiffs were aware of their claims of fraud on the court, conspiracy to commit fraud on the court, fraud, deprivation of civil rights, and intentional infliction of mental anguish and outrage, and because those claims emanated from the same nexus of events as those cited as the basis for Plaintiffs' counterclaims, the claims could have been asserted in the prior lawsuit. See In re: Howe, 913 F.2d at 1144. The fact that the claims were not litigated in that case is not dispositive. Accordingly, Plaintiffs' remaining causes of action against Defendants are barred by res judicata and should be dismissed with prejudice.
C. Statute of Limitations
Even assuming, for purposes of this motion, that Plaintiffs' causes of action for fraud on the court, conspiracy to commit fraud on the court, fraud, deprivation of civil rights, unjust enrichment, and intentional infliction of mental anguish and outrage were not barred by res judicata, they would still be barred by the applicable statutes of limitations.
Statutes of limitations exist to compel the exercise of a right within a reasonable time so that the opposite party has a fair opportunity to defend while witnesses are available and the evidence is fresh in their minds. Robinson v. Weaver, 550 S.W.2d 18, 20 (Tex. 1977). "As a general rule, a plaintiff must exercise diligence in the prosecution of his cause of action. The party must plead and prove that he exercised due care to prevent the running of the statute or else he cannot overcome the properly asserted defense of limitations." Palmer v. Enserch Corp., 728 S.W.2d 431, 434 (Tex.App.-Austin, 1987). When applying state statutes of limitations, a federal court must give effect to the state's tolling provisions. Jackson v. Johnson, 950 F.2d 263, 265 (5th Cir. 1992). In Texas, the discovery rule tolls the beginning of the statute of limitations in tort cases until the plaintiff has learned or should have learned of the incident that gave rise to a claim. Torrez v. Winn-Dixie Stores, Inc., 118 S.W.3d 817, 822 (Tex.App.-Ft. Worth, 2003). A defendant's fraudulent concealment of a wrong estops him from using limitations as an affirmative defense. Booker v. Real Homes, Inc., 103 S.W.3d 487, 493 (Tex.App.-San Antonio, 2003) (citing Borderlon v. Peck, 661 S.W.2d 907, 908 (Tex. 1983).
In Texas, the statute of limitations for fraud claims is four years. Procter Gamble Co. v. Amway Corp., 242 F.3d 539, 566 (5th Cir. 2001). However, if the injured party is not aware of the fraud or the fraud is concealed, the statute of limitations begins to run from the time the fraud is discovered or could have been discovered by the defrauded party's exercise of reasonable diligence. Id. (citing Jackson v. Speer, 974 F.2d 676, 679 (5th Cir. 1992). "Knowledge of facts that would lead a reasonably prudent person to make inquiry which would lead to a discovery of the fraud is knowledge of the fraud itself." Id.
"The statute of limitations for a suit brought under § 1983 is determined by the general statute of limitations governing personal injuries in the forum state." Piotrowski v. City of Houston, 237 F.3d 567, 576 (5th Cir.), cert. denied, 534 U.S. 820 (2001). In view of Texas' two-year statute of limitations for personal injury claims, Plaintiffs "had two years to file suit from the date" that their § 1983 claims accrued. Id.; see also, Hatchet v. Nettles, 201 F.3d 651, 653 (5th Cir. 2000).
Accrual of a § 1983 claim is governed by federal law:
Under federal law, the [limitations] period begins to run `the moment the plaintiff becomes aware that he has suffered an injury or has sufficient information to know that he has been injured.' A plaintiff's awareness encompasses two elements: `(1) The existence of the injury; and (2) causation, that is, the connection between the injury and the defendant's actions.' A plaintiff need not know that she has a legal cause of action; she need know only the facts that would ultimately support a claim. Actual knowledge is not required `if the circumstances would lead a reasonable person to investigate further.'Piotrowski, 237 F.3d at 576 (citations omitted). In other words, "[t]he cause of action accrues, so that the statutory period begins to run, when the plaintiff knows or has reason to know of the injury which is the basis of the action." Gonzales v. Wyatt, 157 F.3d 1016, 1020 (5th Cir. 1998).
In Texas, a two-year limitations period is applied to actions based on unjust enrichment. See HECI Exploration Co. v. Neel, 982 S.W.2d 881, 885 (Tex. 1998); see also TEX. CIV. PRAC. REM. CODE § 16.003.
Claims for intentional infliction of emotional distress are also subject to a two year statute of limitations. See TEX. CIV. PRAC. REM. CODE § 16.003(a); Gray v. Sears, Roebuck Co., Inc., 131 F. Supp.2d 895, 901 (S.D. Tex.2001). A cause of action accrues when the wrongful act effects an injury. Georgen-Saad v. Texas Mut. Ins. Co., 195 F. Supp.2d 853, 859-860 (W.D. Tex. 2002) (citing Moreno v. Sterling Drug, Inc., 787 S.W.2d 348, 351 (Tex. 1990)).
Plaintiffs' claims arise out of a judgment obtained by Sanford against B.J. Martin in state court, the execution of that judgment on certain properties whose title had allegedly been transferred to Mr. and Mrs. Martin, and Defendants' subsequent actions in the several courts which have considered these issues. (Compl. at 13-28.) Plaintiffs' complaint shows that the alleged bad acts of Defendants took place from as early as 1991, and continued through 1994. (Compl. at 18, 25. Plaintiffs state they first discovered they had a cause of action against Defendants on December 2, 1996. (Resp. at 13.) The instant lawsuit was filed on June 6, 2003, more than five years later. Accordingly, the applicable statutes of limitations would bar Plaintiffs' claims against Defendants unless tolled.
For purposes of this motion, the Court will assume that Plaintiffs were unaware of Defendants' alleged bad acts until December 2, 1996. However, Plaintiffs' assertion that they were previously unaware that Defendants had lied to them about foreclosing on the property, had failed to serve them with court documents, and fraudulently executed on the property stretches the bounds of credibility.
Plaintiffs assert that the statutes of limitations should be tolled in this case because they have diligently, but unsuccessfully, attempted to have their claims heard by the courts. (Resp. at 14.) Plaintiffs note that they first sued Defendants in Texas state court in December, 1995, and then filed subsequent suits in the Eastern District of Arkansas and Arkansas state court prior to filing the instant suit. Id. at 13. Additionally, Plaintiffs claim they attempted to have their fraud claims against Defendants heard by the court in which Sanford obtained the original judgment against B.J. Martin. Id. Plaintiffs assert that their claims were not considered by those courts due to the pendency of B.J. Martin's bankruptcy and due to lack of jurisdiction. Id.
The Court notes that this is prior to when Plaintiffs allege they discovered Defendants' wrongdoing.
The fact that Plaintiffs previously filed lawsuits against Defendants which were dismissed does not toll the running of the applicable statutes of limitations. "When a cause of action is dismissed and later refiled, limitations are calculated to run from the time the cause of action accrued until the date that the claim is refiled." Delhomme v. Commission for Lawyer Discipline, 113 S.W.3d 616, 621 (Tex.App.-Dallas, 2003) (citations omitted). Dismissal is equivalent to a suit never having been filed. Id.
It is apparent on the face of Plaintiffs' complaint that the statutes of limitations applicable to Plaintiffs' claims against Defendants have expired. Thuerefore, Plaintiffs' claims of fraud on the court, conspiracy to commit fraud on the court, fraud, deprivation of civil rights, unjust enrichment, and intentional infliction of mental anguish and outrage are time barred and should be dismissed with prejudice.
III. MOTION TO ADD DEFENDANTS
Plaintiffs recently filed a motion for leave to add additional defendants. Plaintiffs' Motion to Add Defendants ("M. to Add"), filed January 7, 2004, seeks to add as defendants Dallas County and the county officials involved in the execution of Sanford's judgment against the subject real property in 1992. (M. to Add at 1-2.) As noted above, the applicable statutes of limitations pertaining to any causes of action stemming from the nexus of events surrounding Sanford's execution of the judgment on the real property, have already run. Plaintiffs' motion admits that their causes of action against the new defendants arose in 1992. Id. It is futile to add a party where the statute of limitations has run. Harmon v. U.S., 1998 WL 460288, *1 (N.D. Tex., 1998) Accordingly, the Court RECOMMENDS that Plaintiffs' Motion to Add Defendants be DENIED.IV. RECOMMENDATION
For the foregoing reasons, the Court RECOMMENDS that Defendants Stephen Niermann and Niermann and Olivo, P.A.'s motion to dismiss should be GRANTED and that Plaintiffs' First Amended Complaint be DISMISSED, with prejudice pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim. Although the motion before the Court seeks only to dismiss Plaintiffs' cause of action against Niermann, because Plaintiffs' bring the same claims against Sanford and the Court's analysis applies equally to those claims, the Court RECOMMENDS that the complaint be dismissed in its entirety.
The Court also RECOMMENDS that Plaintiffs' Motion to Add Defendants be DENIED.
Additionally, the Court RECOMMENDS that all remaining motions pending in this case be DENIED, as moot
SO RECOMMENDED.
INSTRUCTIONS FOR SERVICE AND NOTICE OF RIGHT TO APPEAL/OBJECT
The United States District Clerk shall serve a copy of these findings and recommendation on all parties by mailing a copy to each of them. Pursuant to Title 28, United States Code, Section 636(b)(1), any party who desires to object to these findings and recommendation must file and serve written objections within ten (10) days after being served with a copy. A party filing objections must specifically identify those findings or recommendation to which objections are being made. The District Court need not consider frivolous, conclusory or general objections. Failure to file written objections to the proposed findings and recommendation within ten days after being served with a copy shall bar the aggrieved party from appealing the factual findings, legal conclusions, and recommendation of the Magistrate Judge that are accepted by the District Court, except upon grounds of plain error. See Douglass v. United Servs. Auto Ass'n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) ( en banc).